Property Investment Tips

Whilst there is no doubting the generous returns that investors can experience through property investment, the global financial crisis has been a timely reminder for many investors of the need to be well informed, especially when times get tough. However those with a proven approach were actually investing during the crisis whilst many were paralysed with fear.

Using his mantra of ‘be fearful when everyone else is greedy and greedy when everyone is fearful’ is sound advice.  Property Investing fell during the initial 18 months of the crisis and we are only now witnessing a return to the property market. However during this time, property investors with a disciplined methodology were able to purchase great properties.

Some property investors began to panic as property prices stalled and some began to struggle maintaining repayments on investment loans. Other savvy investors who had well planned property strategies and had taken professional advice at the beginning of their investment plan were able to sleep comfortably at night knowing that their plans were still on track.

In this series of article we are going to cover tips that apply to any property investment strategy will include things like how to get the best investment loan, why proper research is imperative, how to create a checklist of essential needs and why property is such a successful wealth creation vehicle.

These five simple tips can really set you up on the path to acquiring a sound property investment portfolio.

1.  Investors need to take a broader view of the market.  Generalised media opinions about investment strategies are not necessarily the best source of information. Whilst journalists are happy to rely upon general statements, successful investors know that specifically tailored plans are the only reliable method upon which an investment plan can be based. Reading limited information about local area or general advice about a state is insufficient when it comes to research and that is why independent advice and research are imperative.

2. Investment properties need to be return driven.  One aim of investment property research is to identify growth and emerging suburbs within cities that are affordable and to target properties with a large land component. For example, buying a house and land package in a city’s growth suburb based on specific research is better than buying a unit closer to the CBD.  The media may choose to state that the CBD will outdo the middle ring suburbs, though doing thorough research yourself may well prove otherwise. If you are only able to afford $400,000 then a comparison of what you could buy in the CBD, probably an older unit in the outer CBD, compared to a new house in the middle ring suburbs.  This is the value decision you need to consider. The decision needs to be based on an investment basis and not on an emotional whim, or idea of where you may want to live yourself.

3. Consider every element of buying an investment property. The portfolio needs attuned with every other aspect of the strategy. .  For example, choosing a suitable property, it is important to look at the taxation position that applies to your income and family circumstances and then choose the appropriate financing vehicle that will suit your purposes.  The strategy needs to include the type of property, the price range, purchase costs, holding costs, borrowing capacity and an exit plan.  All this needs to be considered before going out and purchasing the property.

4. Plan your finance. You should always make sure that your finance is in place and flexible enough to cater for not just your current purchase but also any planned future purchases as your strategy unfolds. Lines of credit may have more advantages over term loans and interest only packages. Whilst obtaining the cheapest finance is one important aspect, you still need to look at all options to ensure your strategy is not compromised further down the track.

5. Have a support team of professionals that are also property investors is a prudent way to plan your strategy. In the same way that you leave your tax problems in the hand of an experienced accountant, having an accountant whom specialises in property accumulation benefits your overall strategy.  The strategy needs to be planned in overall context and sometimes having all the professional resources under one roof can be a big advantage.